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Friday
Nov092012

Court: City Cannot Ignore Council's Past Promises to Pay Benefits

 

by Stephan Mihalovits

Well the election is finally over. Californians can celebrate another victory for voting as a peaceful, lawful way to make decisions about our state. It makes voters feel we are in control, that the world obeys our will. Allow me to throw some cold water on this celebration of democracy.

This week, a newly published case reminds Californians we are sometimes powerless to fix problems that contribute to chronic budget deficits.

In International Brotherhood v. City of Redding, 2012, the California Court of Appeal held that a city may be forced to honor past promises the city council made to pay medical benefits, irrespective of whether or not the City can afford the fiscal consequences.

A promise stated in a Memorandum of Understanding (MOU) ratified by the city council, is an express legislative authorization that creates vested contract rights for present and future retirees.

Beginning in 1979, the city council of Redding made and approved promises to the city’s electrical workers promising to pay 50 percent of medical insurance premiums for retirees, future retirees, and their dependents. The promises were stated in a MOU that routinely expired and was readopted.

When talks broke down in 2010 over a new collective bargaining agreement, the city unilaterally adopted its own plan for payment of medical benefits, with a much less generous benefits package. The union balked and initiated litigation against the city for breaking its promise. The trial court originally granted the city’s request to throw out the union’s lawsuit, but the Court of Appeal instead found that the lawsuit should continue forward, because contractual rights may have vested through city council approval of its promises.

 

The Precedents That Bind

 

To be clear, we do not have a court overreaching its authority in this situation. The court based its decision on established state law and noted it was following the recent Supreme Court opinion, Retired Employees Assn. of Orange County, Inc. v. County of Orange, holding that a vested right to health benefits for retired employees can be implied from a county ordinance or resolution.

The Court reasoned that, if an implied promise is sufficient to bind a city, then surely an express promise approved by the city council can be a binding promise as well. The court dismissed the city’s defense of budgetary woe, stating, “the city provides no authority for the relevance of whether the city, in the future, can afford to keep such a promise.” 

While based on established case law, the decision fails to discuss the foreseeable, negative effects on third parties, namely saddling the public with debt it can’t afford and never agreed to.

The court did not contemplate whether the city council meetings where promises were adopted were heavily or sparsely attended by the public. Nor did the court consider whether council members believed the promises in the MOU, like the MOU itself, expired after a certain period of time.

The court focused solely on the binding nature of express legislative authorization by the city council when it approves promises to pay benefits.

Voters try their best to elect local officials who will be responsible financial stewards. But when those officials make decisions that later turn out to be infeasible and foolishly made, it is the taxpaying public who is bound, not city officials. Officials act in their own political self-interest by approving short-sighted compensation packages. Municipalities should be given a chance to discuss current budget constraints and flawed budgetary assumptions on which promises were based.

 

Fixing a City's Financial Crisis

 

The court may have left a light on for those worried about these potential consequences. As with many issues, the court here would rather not make decisions when the legislature is capable. As stated in Retired Employees, binding promises can be prevented if such promises are already prohibited by law. Thus, the court signaled a role for legislative bodies across the state to take preventative measures to prohibit municipalities from making excessive promises.

Options include an overt ban on municipalities making promises that stretch more than 10 or 20 years in the future. Another option is to include a trigger to reopen contract talks between municipalities and unions if budget numbers do not meet certain threshold levels to fund obligations.

The options are out there, and the courts are willing to guide us. It is up to elected leaders to take proactive steps.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.
Wednesday
Nov072012

California Landlord Tenant Law – Responsibilities of Landlord in Default and Foreclosure (SB 1191)

Corporate Litigation Lawyer Los AngelesBusiness Litigation Paul C. Bauducco
818.907.3245

 

New California landlord tenant laws go into effect in 2013 for rental property owners facing foreclosure.

Senate Bill 1191 was signed into law by Governor Jerry Brown in September, adding Section 2924.85 to the Civil Code. (Read about other new laws for landlords, housing associations, and property managers in last week's blog, Seven New Laws in Effect January 1st.)

 

Notice of Default - California Civil Code Section 2924.85
(Effective January 1, 2013)

 

If you provide single-family homes or multi-family dwellings of four or fewer units for rent and have received a notice of default for a mortgage or deed of trust for the property, you are required to provide written notice – in English and other languages per California Civil Code Section 1632 – of that default to any prospective tenants.

In your notice to a prospective tenant, you must disclose that the property may be sold in foreclosure and that the tenant may, or may not be forced to move in the future.

You should also state that a new landlord or property owner must honor the lease unless the new owner chooses to occupy the property as a primary residence or if there is a "Just Cause for Eviction Law" applicable in your city.

If you are buying a rental property in a foreclosure sale, you'll need to provide the tenants with a 90 day notice of eviction if you plan to evict.

 

Penalties for Violating Section 2924.85

 

Section 2924.85 provides for certain tenant rights in the event a landlord fails to give the required notice, including:

  1. Allowing the tenant to void the lease and recover the greater of one month’s rent or twice the actual damages suffered; or

  2. If a foreclosure has not occurred, allowing the tenant to elect not to terminate the lease, but to deduct an amount due to the landlord equal to one month’s rent.

 

Foreclosure Notice - California Civil Code Section 2924.8
(Effective March 1, 2013)

 

As a property owner, you should direct your managers to deliver written notices of foreclosure to existing tenants in writing.  The exact language for the Notice is set forth in Section 2924.8, including notice that:

  1. Landlord LawForeclosure has begun which may affect the tenant’s right to continue to live in the property.

  2. The property may be sold 20 days or more after the date of the notice.

  3. The new property owner may give the tenant a new lease or provide the tenant with a 90 day eviction notice.

  4. The tenant may have the right to stay in the property longer than 90 days if he/she has a fixed term lease, which the new owner must honor, unless the new owner will occupy the property as a primary residence.

  5. In some cases and in some cities, where there is a “just cause for eviction law”, the tenant may not have to move out.

  6. The tenant may wish to contact a lawyer or legal aid office to discuss his/her rights.

Paul C. Bauducco is a Construction Defect and Real Estate Litigation Attorney at our Firm. He is also the Chair of the Business Litigation Practice Group. Contact him via email: pbauducco@lewitthackman.com.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.
Thursday
Nov012012

California Election - Los Angeles County Measure by Measure

Los Angeles Environmental AttorneyLos Angeles Environmental & Business LitigationStephen T. Holzer
November 1, 2012

Los Angeles Environmental Attorney

We've already discussed the pros and cons of the California Propositions appearing on the ballot next week, with a look at what major groups were for, or against each initiative.

This time, we're going to take a look at some of the Measures up for vote in Los Angeles County and the San Fernando Valley – though there are many others that pertain to individual cities in Southern California. (If you'd like a look at all of the ballot measures, click here.)

 

Los Angeles County Election Ballot Measures

 

The first three, Measures A, B & J, will affect all Los Angelenos, while the last two, Measures HH & MM, affect only those in and around the Santa Monica Mountains and the San Fernando Valley. 

 

 

Measure A:  Appointment of County Assessor – County of Los Angeles

Should the Los Angeles County Assessor's position be appointed, or elected? Currently, it's an elected job, but this measure seeks to change the California Constitution and the Los Angeles County Charter to make the position an appointed one. This is a non-binding vote, meaning it's a temperature check to see what the public thinks.

Opposition to Measure A:

The Los Angeles County Democratic Party, the Republican Party of Los Angeles, and the Los Angeles Times all advise voting NO on Measure A.

Opponents say that even though elected assessors may be susceptible to giving tax breaks to campaign donors, appointed assessors will be influenced by their appointers – boards of supervisors with an interest in keeping tax monies rolling in at a maximum rate.

Support of Measure A:

The Long Beach Telegram suggests a YES vote as the better choice, citing John Noguez's alleged abuse of power while in his position as County Assessor as a prime reason why.

 

Measure B:  Los Angeles Porn Actors Required to Wear Condoms Act

Now here's a hot topic. Should we make adult film actors wear condoms while shooting porn? This Safer Sex Initiative also requires the Los Angeles Department of Public Health to conduct inspections and enforce the Act – it's the enforcement that's at issue here, as a city ordinance already requires the porn stars to wear condoms.

Opposition to Measure B:

The adult film industry, the Republican Party of Los Angeles, and two Los Angeles newspapers all oppose the Safer Sex Act, citing another tax on the people as well as more runaway productions. The San Fernando Valley is an informally acknowledged capitol of adult entertainment, and has been since the 1970s.

Support of Measure B:

The AIDS Healthcare Foundation and the Los Angeles County Medical Association say Measure B will help reduce the prevalence of sexually transmitted diseases with no cost to taxpayers. 

 

Measure J:  Los Angeles County Sales Tax for Transportation

This measure will continue the ½ cent sales tax increase (2008 voter-approved Measure R) scheduled to end in 2039, to extend another 30 years, to 2069. Measure R (and now J) is meant to finance new transportation projects and hasten those already in planning. To pass, Measure J needs a 2/3 supermajority vote.

Opposition to Measure J:

Two city supervisors and some local groups like the Bus Riders Union and the Beverly Hills Board of Education who form the Measure J opposition say it promotes gentrification – certain groups asked the Metropolitan Transportation Authority (MTA) to upgrade the Crenshaw Boulevard Line, and to rebuild affordable housing destroyed when the Gold Line was built in East L.A. But the agency has "stonewalled" these requests. Some are calling Measure J a "blank check" to MTA.

Support of Measure J:

MTA says approval of Measure J will cost LA taxpayers approximately $25/year/individual, on average – but will generate $90 billion in revenue between 2039 and 2069. The Los Angeles Times and other major news groups support the measure, citing new jobs, less traffic and better accessibility to LA's more popular areas. 

 

The San Fernando Valley - Measures HH & MM

Measures HH and MM are similar. They are parcel taxes to help fund the Mountains Recreation and Conservation Authority, or MRCA.

The MRCA acquires, maintains and improves open spaces, parks and wildlife corridors. The public agency improves fire prevention, protects water quality and facilitates security, among other things, at these places. MCRA has been funded by a 20 year old property assessment that will expire soon.

Measure HH helps MCRA to provide these services from the East Santa Monica Mountains into the Hollywood Hills by imposing a $24 per year tax for 10 years. The funds can only be spent in the Santa Monica Mountains east of the 405 freeway.

Measure MM imposes a $19 per year tax for 10 years to provide the above services in Encino, Tarzana and Woodland Hills. 

Opposition to Measures HH & MM:

There doesn't appear to be an organized opposition to the measures, though there are a few lone voices naysaying HH & MM.

Support of Measures HH & MM:

Both HH supporters and MM supporters have the backing of the Los Angeles Democratic Party, the Los Angeles Daily News, California State Assembly Member Bob Blumenfield, Los Angeles City Council Member Paul Koretz, and various homeowners' associations affected in the San Fernando Valley.

Need more California Election information? Read up on the pros and cons of Propositions 30-35, and Propositions 36-40.

 

Stephen T. Holzer is an Environmental and Business Litigation Attorney at our Firm, as well as the Chair of our Environmental Practice Group. Contact him via email: sholzer@lewitthackman.com.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.
Wednesday
Oct312012

California Landowners & Managers: 7 New Laws in Effect January 1st

Corporate Litigation Lawyer Los AngelesCommercial Real Estate Litigation  

 

Paul C. Bauducco
818.907.3245

 

Whether you own private or commercial rental property, serve as a member of a housing association, are a California realtor, or just have an interest in buying, selling or leasing property, take note:

With the New Year come new rules regarding your real estate.

Hopefully you are already in compliance with the new laws Governor Jerry Brown signed this past legislative season. If not, there are some important property ownership and management laws you should be ready for on January 1st.

 

2013 Common Interest Development & HOA Laws

 

Assembly Bill 1838 amends the Davis-Stirling Common Interest Development Act,  which regulates common interest developments like apartments, condos, townhouse developments and stock cooperatives.

1.  Cancellation Fees: HOAs won't be able to collect cancellation fees for HOA sales disclosure documents under AB 1838 if the cancellation is requested in writing, and if the work on the order has not yet been fulfilled, or if the HOA has already been compensated for that work.

2.  Davis-Stirling Simplified: The Act has also been reorganized. Assembly Bill 805 (the bill relocates the Act to a different part of CA Civil Code) doesn’t go into effect until January 1, 2014, so HOAs won't have to change governing documents to reflect the move until the end of 2013.

 

New Laws for Landlords & Property Managers

 

If you own or manage apartments, townhouses or space in an RV park, these new California landlord tenant laws apply to you:

3.  Notice of Default: Landlords must disclose written notice of default under any mortgages or deeds of trust on rental properties to any prospective tenants, if renting properties containing one to four residential units, before signing a lease agreement. Under Senate Bill 1191, the tenant may void the lease and recover either one month's rent or twice the amount of damages and all prepaid rent should a landlord fail to provide notice.

4.  Foreclosure Notice: Month-to-month tenants must be given a written 90 Day Notice to Terminate a rental unit when a property is foreclosed. If a tenant still has a fixed-term lease, generally the tenant can remain until the end of the term, under Assembly Bill 2610

5.  Mobile Home Owner Rights: Per Assembly Bill 2150, managers or owners of mobile home parks must provide a specified notice in the rental agreement for space, before February 1st of each year, starting in 2013. The notice sets forth rights and responsibilities of the mobile home owner, including a 90 day notice of a rent increase.

6.  Abandoned Property: When a tenant quits the premises and leaves behind personal property, the landlord must sell the abandoned property at public auction if it is worth $700 (formerly $300) or more, per Assembly Bill 2521.

7.  Animal Control: Landlords who allow tenants to keep pets cannot require tenants to have their pets declawed or devocalized as a condition of occupancy, per SB 1229.

These are just some of the California real estate laws affecting landlord-tenant relations and home owner associations in 2013. Please feel free to contact me if you have any questions regarding real estate or construction law.  A better understanding of the law can prevent problems and litigation.

Paul C. Bauducco is the Chair of our Business Litigation Practice Group. You may reach him via email: pbauducco@lewitthackman.com.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.
Wednesday
Oct242012

Employers: Methods for Computing Commissions Must be Put in Writing

Employment Defense Attorney Los Angeles

 

by Sue M. Bendavid
818.907.3220

 

Beginning January 1st, all companies employing commissioned workers in California must provide written agreements describing the method by which commissions are computed and paid, per Assembly Bill 1396

The new requirement comes from recent legislation which amends the California Labor Code. Formerly, it applied only to out-of-state employers who employ California-based workers. 

Employee CommissionsThe Labor Code defines a commission as compensation paid to any person for services rendered in the sale of such employer's property or services and based proportionately upon the amount or value thereof. 

Since commissions are actually wages, it's important for you as an employer to make sure you pay them correctly and on time, to prevent wage and hour claims. 

 

Avoiding Employee Claims for Unpaid Wages 

 

It is not enough to merely outline how commissions are computed and earned.  As someone who hires commissioned employees, you must describe the calculation methods into a written contract, sign it, and then obtain a signed receipt for the contract from the commissioned employee. 

You should clearly define when a commission is “earned.”  Will your employee earn commission when a sales agreement is signed, when products are shipped, or when the company receives payment from the client for the products or services? 

Make sure you follow the terms of your agreement with your employee. 

 

AB 1396: Other Considerations 

 

The new law affects employers who routinely compensate employees through commissioned pay structures, as well as those who use this method on an occasional or even rare basis. 

Also per AB 1396: 

  • If your commission agreement expires, the terms of your signed agreement will remain in effect until you supersede it, or until the agreement is terminated in writing. 
  • You won't have to include short-term productivity bonuses (i.e. for retail clerks) or bonuses and profit sharing plans as commissions, unless you offer to pay a fixed percentage of sales or profits as compensation for work to be performed. 

This may seem like extra paperwork, but there is some good news for employers, as AB 1396 repeals a Labor Code provision making an employer who violates this section liable for “triple damages.”  Still…to prevent employee claims in the first place, get your agreements in order now, before the New Year. 

Sue M. Bendavid is the Chair of the Employment Practice Group, which defends employers from wage and hour and other employee claims. Email her for more information: sbendavid@lewitthackman.com.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.
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